20210615Comments.pdf

DAYN HARDIE
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-007 4
[phone]
IDAHO BAR NO. 9917
Street Address for Express Mail:
I I33I W CHINDEN BVLD, BLDG 8, SUITE 2OI-A
BOISE, ID 83714
Attorney for the Commission Staff
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT
APPLICATION BETWEEN ROCKY
MOUNTAIN POWER AND P4 PRODUCTION,
LLC REQUESTING APPROVAL OF AN
AGREEMENT TO RETIRE RECS
CASE NO. PAC.E.2I.O8
COMMENTS OF THE
COMMISSION STAFF
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STAFF OF the Idaho Public Utilities Commission, by and through its Attorney of record,
Dayn Hardie, Deputy Attorney General, submits the following comments.
BACKGROUND
On March 29,2021, PacifiCorp dba Rocky Mountain Power ("PacifiCorp") and P4
Production LLC. (*P4") jointly requested the Commission approve the P4 System Renewable
Energy Certificate Retirement Agreement ("Agreement").
P4 and its predecessor in interest Monsanto have operated the Soda Springs phosphate plant
continuously since 195I. P4 owns the Soda Springs plant and mines as a wholly owned subsidiary
of Monsanto. In October 2018, Bayer acquired all assets of Monsanto.
P4's Soda Springs plant is the largest single user of electricity in PacifiCorp's six-state
system, with a load of approximately 200 MW and 1.5 million MWh per year.
In Decemb er 2019 , Bayer announced a corporate goal to achieve 100% of its global
electricity purchase with renewable electricity by 2030. Bayer's initial strategy to achieve this goal
ISTAFF COMMENTS JUNE I5,2O2I
includes retirement of its share of PacifiCorp's system renewable energy certificates ("RECs")
allocated to Idaho and possible purchase of additional RECs on the market beginning in202l.
On March 24,2021, P4 and PacifiCorp entered into the Agreement, under which PacifiCorp
would retire, rather than sell, P4's allocated share of RECs generated from PacifiCorp's system
resources. If approved, the Agreement would be effective starting January 2021 and would
automatically renew unless aparty elects to terminate the Agreement.
RECs from PacifiCorp's generation facilities and purchase power agreements are allocated
to states under the Commission-approved2}2} Protocol cost allocation method. System RECs are
allocated to ldaho based on the System Generation factor. Under the Agreement, P4's share of
RECs allocated to Idaho will be proportional to P4's System Generation factor compared to Idaho's
System Generation factor. In20l9, P4 represented approximately 30Yo of Idaho's System
Generation factor.
The treatment of Idaho's remaining share of RECs would be unchanged by this Agreement.
The Applicants state that the Agreement will not impact other customers because revenue from the
sale of P4's share of system RECs was previously passed back to P4 and not to other customers. P4
will pay PacifiCorp annually to cover PacifiCorp's costs to administer the Agreement. Initially, P4
will pay PacifiCorp $15,000 per year to administer the Agreement.
STAFF ANALYSIS
Conclusion
Staff believes the agreement as presented in the Application would not increase costs for the
body of the ratepayers and should be approved by the Commission.
Reasonableness of Percentage allocated to P4
Staff reviewed PacifiCorp's proposed method to allocate RECs between PacifiCorp and P4.
PacifiCorp allocates RECs to Idaho based on the System Generation ("SG") factor, which is
updated annually. PacifiCorp proposes to have P4's share of RECs be proportional to P4's Idaho
load for that Reporting Year. Attachment A at 2. PacifiCorp will then retire P4's share of RECs
rather than sell them. Based on its review of the proposed REC allocation methodology for P4's
share of RECs, Staff finds the proposal to be reasonable and recommends the Commission approve
the proposed method.
2STAFF COMMENTS JUNE I5,2O2I
Staff reviewed other allocation methods including the System Energy ("SE") factor. Using
the SG factor provided a favorable outcome for Idaho ratepayers versus using the SE factor. In
order to maintain that Idaho ratepayers are not harmed by this transaction, Staff will closely
examine the allocation factors each year when PacifiCorp files its energy cost adjustment
mechanism ("ECAM") and recommend any necessary adjustments.
Compliance with Idaho Code S 6l-328
This proposal does not fall under the statutory requirements of ldaho Code $ 6l-328
governing the sale of electric utility property used in generation, transmission, distribution, or
supply of electric power. While this Statute does not govern this sale, it provides a useful
framework for Staff s analysis. Idaho Code $ 6l-328(3) requires PacifiCorp to obtain Commission
authorization, showing: (a) that the transaction is consistent with the public interest; (b) that the cost
of and rates for supplying service will not be increased by reason of such transaction; and (c) that
the applicant for such acquisition or transfer has the bona fide intent and financial ability to operate
and maintain said property in the public service. After review of the proposal under each criteria,
Staff believes that the proposal complies with the Statute.
The transaction is consistent with the public interest.
Staff believes Idaho customers would not be harmed by these transactions. Additionally,
the transaction would be consistent with public interest in that P4 has requested PacifiCorp retire,
rather than sell their allocation of RECs, thereby supporting its clean energy goals without
impacting other customers.
The cost o.f and rates .for suppllting service will not be increased b:t reason o.f such transaction.
Since Idaho's allocation of RECs from PacifiCorp's system will not change under the
Agreement, Idaho customer net benefit from RECs as a whole will not be impacted. Based on
Staff s earlier analysis, all other customers besides P4 should receive a greater share of Idaho's
allocation of REC revenue under PacifiCorp's proposal. Staff determined this by comparing the
amount of revenue received and the amounts customers would have received through PacifiCorp's
proposal in the last three ECAM's. P4 will likely see an increase in rates in future ECAMs since it
is receiving a smaller share of equivalent REC revenue and retiring its allocation of RECs.
JSTAFF COMMENTS JLrNE 15,2021
However, P4 has agreed to these terms in the Agreement so it can achieve its corporate clean
energy goals.
The aoolicant has the bonafide intent andfinancial abiliq) tu operate and maintain said prooertv in
the public service.
PacifiCorp is a multi-billion dollar company with financial resources to efficiently and
effectively manage the acquisition, sale, and retirement of RECs for customer benefit and has been
doing so since RECs were first introduced several decades ago. The proposed changes will affect
how P4's allocation of RECs are processed, but fall within PacifiCorp's business process regarding
RECs in its other jurisdictions. This change should have negligible impact on PacifiCorp's
operation and financial structure. The Agreement will include payments to the Company of
$15,000 per year to cover administrative costs.
Requested Trackin g/Reporting Requirem ents
Since REC revenues are tracked through the ECAM, Staff recommends PacifiCorp mention
any RECs reserved to be retired for P4 in its quarterly ECAM reports filed with the Commission.
The Agreement states that PacifiCorp will provide two reports to P4 in October. The first is the
Position Report. The second is the Retirement Report. Because of the relation to the ECAM, Staff
recommends that PacifiCorp include copies of these reports with the 3'd Quarter ECAM report
generally filed in late November.
Staff will review the impact of the Agreement when it receives these reports as well as in
each annual ECAM filing. Should the environment change altering the effect of this Agreement on
other Idaho ratepayers, Staff may reevaluate and propose changes at that time.
STAFF RECOMMENDATION
Staff recommends the Commission approve the Agreement with the reporting requirements
mentioned above.
4STAFF COMMENTS JUNE I5,2O2I
I st!Respectfully submitted this day ofJune 2021.
Deputy Attomey General
Technical Staff: Joseph Ter,ry
Taylor Thomas
RiekKeller
i : umise,/eomments/pa!€2 l.Sdhltak comments
5STAFF COMMEN'TS JUNE I5,2O2I
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS l5th DAY OF JUNE 2021,
SERVED THE FOREGOING COMMENTS OF TIIE COMMISSION STAFF, IN
CASE NO. PAC.E-21.08, BY E.MAILING A COPY THEREOF, TO THE
FOLLOWING:
TED WESTON
ROCKY MOUNTAIN POWER
I4O7 WEST NORTH TEMPLE STE 330
SALT LAKE CITY UT 84I16
E-MAIL: ted.weston@pacifi corp.com
idahodockets@pacifi corp.com
DATA REQUEST RESPONSE CENTER
E.MAIL ONILY:
datarequest@pacifi corp.com
ADAM LOWNEY
MCDOWELL RACKNER GIBSON PC
4I9 SW l lth AVE., SUITE 4OO
PORTLAND OR 97205
E-MAIL: [e-mail]
EMILY WEGENER
ROCKY MOUNTAIN POWER
1407 WN TEMPLE STE 320
SALT LAKE CITY UT 84I 16
E-MAIL: emil
RANDY BUDGE
RACINE OLSON, PLLC
201 EAST CENTER
POCATELLO ID 83204
E-MAIL: [e-mail]
CERTTFICATE OF SERVICE